When Payment Vendors Come Calling
By Brian Albright, Business Solutions magazine.
Considering new payment partners? Make sure they can add value — and don’t get bogged down in an unwieldy integration project.
As the payment industry evolves along with technology advancements and shifting regulations, ISVs continue to be inundated with requests from payment companies to integrate with their offerings. Those that are already maintaining well-established links with existing partners may dismiss these opportunities, but is there a case for adding more partners or replacing existing ones?
Yes, at least in some cases, says Chas Gannon, vice president of strategic alliances for SecureNet Payment Systems. “Payment technology is constantly evolving, and it is important to remain relevant with features and services that will help ISVs and their customers differentiate themselves from their competition; otherwise, you will find yourself drowning in the minutia of integration projects,” Gannon says.
The technology needs of merchants are constantly changing, and POS systems have to accommodate emerging e-commerce and mobile payment solutions, along with an ever-lengthening list of ancillary features. “Not all integration partners have everything an ISV is looking for,” says Tracy Metzger, CIO of North American Bancard. “Some specialize in e-commerce and provide significant value to the ISV’s solution but may not have the right tools for the brick-andmortar POS needs. Because of these specialties, ISVs need to add integration partners to satisfy market demand and deliver value to their customers.”
Adding additional payment integration partners can provide merchants with a wider choice of service providers, while opening up opportunities for value-added services like free gift card processing, mobile payment solutions, and security methods, in addition to electronic payment transactions that can significantly reduce costs and add value to the partners’ solutions. But limit these new partnerships to those that can actually help improve your solutions offering. Each integration adds to the number of interfaces that have to be maintained and managed as rules and regulations change. This type of application maintenance can quickly overtake an ISV’s development roadmap and force compromises on features. Look for integration endpoints that provide depth to your offerings, without adding cost to customers.
What To Look For In A Payment Partner
In general, any new potential payment partner should provide a variety of endpoints and payment options, along with gift, loyalty, and mobile wallet support, coupon integration, and other services to maximize the resource investment in developing the interface. The company should also be financially sound and focused on customer service at both the partner and the merchant level.
“Payment processing integration partners become an extension of your customer service arm, and you’ll want to know that your merchants will receive the best merchant pricing and account service,” says Henry Helgeson, CEO of Merchant Warehouse. “Furthermore, you’ll want to know if you’ll be happy with the relationships you’ve created for your business.”
Other capabilities to look for: PCI-secure gateway and payment screens; a clear technology roadmap that supports future payment types; the ability to connect their solution with other payment devices; the ability to integrate with third-party accounting solutions; revenue sharing on payment processing; co-marketing campaigns; and partner marketing programs for the ISV’s clients. In addition, having an automated merchant boarding solution can reduce contractto- revenue time by as much as several weeks.
Mobility, EMV Capabilities
According to the vendors interviewed for this story, one of the key trends affecting payment solutions over the next few years will be the movement of payment data away from the POS application into specialized platforms designed for storing payment and card data. This helps better secure data while reducing PCI compliance scope. Mobile payment and chip card payments will also play a larger role. If ISVs are unprepared for this shift, they could risk losing market share.
“ISVs should be monitoring the move toward EMV in the U.S. market and the continuing importance of this technology in the mobile space,” says Rob Bertke, senior vice president for research and development at Sage Payment Solutions, a division of Sage North America. “New technologies are emerging that allow PIN entry for POS and mobile solutions, and the market appears to be embracing this shift.”
Maintaining PCI compliance should also be a top concern when working with new payment platforms. ISVs are commonly told that integrating with certain payment platforms relieves their responsibility to remain PCI compliant as a payment application. “There are certainly some cases where ISV’s can completely outsource all of their payment processing to third-party middleware applications or cloudhosted payment solutions, but this must be an all-or-nothing scenario for that to apply,” Metzger says. “ISVs must consider the effort to move all of their customers to these solutions versus maintaining their PCI-PA compliance.
“ISVs that are exploring mobile extensions of their application using tablets or smartphone devices should consider integration points that support tokenization and point-to-point encryption to ensure the mobile platform adheres to the newly released PCI Mobile Payment Security Guidelines,” Metzger adds.
Avoid Poorly Managed Integrations
So adding a new payment partner can be a good idea, provided it adds value for your merchant clients. But tread carefully; each new integration comes with its own set of potential pitfalls.
“One of the biggest misconceptions is around the perceived simplicity [of an integration],” Bertke says. “Because of the many new entrants in this space, it’s easy to underestimate the complexities in payment processing and deliver a solution with a very large support cost. Understanding the nature of card processing and the appropriate industry concepts is imperative.”
ISVs can also get caught up trying to integrate and support every gateway on the market, which can quickly result in the development team spending more time integrating and supporting payment partners than developing the core product. Focus on building strong relationships with a limited number of partners that provide a broad payment offering.
Difficult-to-follow APIs can slow down the integration process, as can certification programs, which can sometimes take months to complete, depending on the complexity of the solution. “ISVs go into the process all gung-ho and are met with reality check on time, and sometimes other priorities trump the payment integration,” Metzger says. “Without clear API documentation and a streamlined certification process, this can take months to complete. It may only take a couple of weeks to write the interface once your development team understands the API, but the time to certify and the potential PCI implications will always take longer than expected. As a rule, always factor in, at minimum, two months to complete a certification and sometimes as much as six months, depending on the company.”
Other potential problems with a new partnership can include a lack of support, a challenging integration environment, difficult to use tools, confusion about PCI scope, and inadequate ISV support programs. It’s important to investigate all of these elements of the potential partner program and establish expectations ahead of time.
A lack of good business support can also lead to challenges in the development of product requirements. Purely technical assistance is important, but ISVs also need assistance in understanding how to implement payment processes. “Providing customers with a transaction history and the ability to manually close batches or reverse transactions are examples of functionality that is not intuitively obvious without a strong partner helping out with the integration,” Bertke says.
Most importantly, any new integration should provide both the ISV and the payment partner the opportunity to expand their product offering and their revenue. “ISVs should evaluate their future business goals and engage with payment integration partners who will help them attract new clients to grow their business, support the ever-changing technology needs of their clients, and generate revenue for their business,” Gannon says. “The ISV owns the client relationship; therefore, the payment process should be a source of revenue for their business, not a cost center of integration and support.”